The 7th Annual Digital Smart Factory Forum

Conference held June 15-17, 2005 at the Fountainbleu Resort in Miami Beach, Florida

Originally appeared in GATFWorld Magazine, August 2005

By Chuck Gehman

It’s hard to believe we’ve just completed the seventh annual Digital Smart Factory Forum event in Miami this June. It seems like only yesterday we first convened to discuss automating print processes and CIM (Computer Integrated Manufacturing) applications for print.

If you’ve read my articles in the GATF Tech Forecast for the last few years, then you already know the history and goals of the Digital Smart Factory Conference and the DSF Committee of the Research and Engineering Council of the NAPL. You can go back and read those many articles if you are interested in the history of the Forum. In this article, I’d like to report on this year’s forum and its implications for the industry and what it may predict about technology and the printing industry in the future.

The Digital Smart Factory’s focus on streamlined production, automation, interoperability, and building a better customer experience, is directly aligned with the goals that profitable, forward-looking printers have embraced since long before the group’s founding. Frank Romano pointed this out very succinctly in his special presentation to the forum this year—drawing parallels between many of our philosophies and the writings of printing visionary Charles Francis, who articulated some of our goals in his 1917 book, Printing For Profit. Francis said, “The only way to make money in the printing business is to do work a little better, finish it a little more promptly, and make fewer blunders than others.” Well said, and amazingly still the keys to success today as Frank aptly pointed out. I’ll talk more about some of Frank’s observations later in this article.

However, our specific emphasis on the use of computer systems—customer-facing web applications, connecting to those used for business and manufacturing, and then using them to analyze business and production performance, has never been more timely and of interest to more printers, as shown by the attendees of the Forum.

These are ideas that many in the printing industry once thought weren’t applicable. As a custom, on-demand manufacturing environment, many assumed we could never apply the kind of rigorous process controls advocated by such systems. But interestingly enough, if you look outside of print at where the manufacturing world has gone, you will see that manufacturers of all types are increasing offering “custom” products, with shorter runs. How to accomplish this, and more, was what we heard at this year’s conference.

The 7th Annual Digital Smart Factory Forum began with a joint session with EFI’s Connect user conference, in which the NAPL’s Chief Economist Andy Paparozzi delivered a special “State of the Industry” report. Paparozzi is by far the most “exciting” economist as a speaker you are likely to encounter. You can obtain a copy of his presentation and his analysis of where the business is going over the next couple of years, from the NAPL.

The First Day
Tim Daisy from Kodak, and Mark Evans from Chicago-based printing company JohnsByrne (both individuals are long time CIM and Smart Factory visionaries, and JohnsByrne is one of the earliest CIM advocates and perhaps the first company in the industry to implement JDF for press and prepress connectivity) hosted a tutorial for first time attendees. This tutorial was a new “feature” of the Forum, and veterans Daisy and Evans provided both the deep background and good information about how to most benefit from the upcoming days of the conference.

Barb Pellow “Tells it Like it Is”
The Forum began in earnest with a rousing keynote address by Barbara A. Pellow, Chief
Marketing Officer and Vice President of the Kodak Graphic Communications Group.
Her subject was Integrating Companies, Processes and Customers into the Digital Smart
Factory.

Pellow began her talk by explaining that the most important focus for a successful printing operation is the customer. New channels of communication are changing the way companies interact with their customers. Everyone reading this magazine knows that Printers must increasingly deal with shorter runs, reduced turnaround times, increased pricing pressure, and viable alternatives to print. A common theme heard throughout the rest of the conference, but introduced first by Pellow, is the idea that “better, faster and cheaper” is not the way to deal with the changes the industry is facing.

Instead, a better strategy is to adopt new workflows, and to become adept at cross-media applications in addition to print. Adding process design, technology evaluation, development, testing, deployment, and analysis (common tools used by information technology professionals) rounds out the equation for transitioning from being a “printer” to being a “communication service provider”. Certainly, Pellow made the point that the transition to digital print represents a great opportunity for forward-looking printers that encompasses both print manufacturing and information technology. Barb offered numerous case studies of companies employing these strategies.

How to Build a Digital Smart Factory
Tim Daisy then hosted a panel entitled The Digital Smart Factory: Where to Begin. Joining Tim were Mark Evans, Vice President of Technology and Business Development at JohnsByrne; Ray Hartman, Group Executive Vice President for Manufacturing Technology at R. R.Donnelley & Sons; Murray Oles, Chief Technology Architect at venerable label and packaging concern Fort Dearborn Company and Principal at Chalex Corporation; and Vincent Sita, Vice President of Manufacturing at Florda Printer Rex 3.

Hartman, a long-time proponent of the Digital Smart Factory concept and also a long-time R+E Council member, began by noting that he is spending $26 million to build the first Digital Smart Factory for Donnelley, in Atlanta, after a significant success with Nielsen Printing (discussed at last year’s forum) in Cincinnati. Computer integrated manufacturing, said Hartman, is critical to profitability, and JDF is out to eliminate “old school” print production processes. JDF, said Hartman, is like the dashboard in your car. It would be foolish, he said, to drive with no instruments in a car, and it is equally foolish to run a printing business without similar information. At Nielsen, the idea was to automate and integrate, while improving visibility and creating collaborative environments. This was done by connecting the JDF nodes and thus linking ‘silos’ in the printing company. The Nielsen objectives were to:

· Reduce the overall cost of manufacturing
· Reduce cycle times
· Create straight through processing
· Develop integrated production processes (‘RPM,’ for repeatable, predictable and
measurable results)

Hartman gave the group an update on the success at Nielsen, and then described how RRD is taking CIM, JDF and the Digital Smart Factory to new levels at the new facility in Atlanta, with the unique benefit of being able to design a plant “from the ground up” because a new freeway required moving the former operation to a new site.

The next speaker was Murray Oles, who spoke in detail about how Fort Dearborn is an integral part of their customer’s supply chain. The issues facing the company include managing a database of about 100,000 labels, which are ganged primarily on conventional presses. The company also does flexography, gravure, and digital (Indigo) printing for labels. Reacting quickly in a changing world where there are new consumer products on the shelf weekly at supermarkets provided an excellent case study for Smart Factory concepts.

Vincent Sita, another returning speaker at the forum, spoke next about his company, Rex 3, a $24 million operation that began as a photoengraver. Today the company operates six Komori sheetfed presses, and recently began employing digital and Variable Data Printing. Sita described how the Digital Smart Factory ideas help improve productivity and eliminate errors. At Rex 3, the cost of reprints due to plant error is approximately 0.5 percent of sales. He talked about how any mistake made in the plant is a taken with the utmost level of seriousness. A JDF advocate, who is just starting to implement the technology as vendors make solutions available, Sita described how in many cases JDF would have prevented errors in processes. For example, a customer service representative typed the wrong numbers into the work order and a book was trimmed to the wrong size. The idea of CIM, Sita said, is to simply try to reduce the occurrence of “stupid”mistakes, by eliminating re-keying and expressing job intent beginning with the customer, through the manufacturing process.

Mark Evans talked about a unique new business opportunity JohnsByrne created with their customer Cancer Treatment Centers of America. The group uses a direct-to-patient model, with most patients suffering from third or fourth stage cancer and who have already exhausted most options in the traditional healthcare system. CTCA’s marketing relies on television, radio, the Internet, research, and patient referrals. All leads flow into a telemarketing center, where the people who answer the telephone are trained as cancer information specialists.

By working with JohnsByrne, the client realized cost reductions of 65 percent, verified by audit. The savings funded development of new initiatives (a literature distribution
system, client segmentation program, personalized response system, and comprehensive
reporting). The response time today is 12 hours, and sales have increased by 12 percent. Evans stressed how important the element of “trust” is to JohnsByrne and this customer; when a potential patient calls in to request information, the key is that they receive the promised, relevant information, exactly when the call center representative promised it.
Currently the error rate is 1 in 35,000 shipments.

Frank Romano Shakes Things Up
The first day of the forum came to a dramatic climax with Frank Romano, Professor Emeritus at Rochester Institute of Technology, whose talk, entitled CIM: Why Now? (Sink or CIM), challenged assumptions and the hype generated by industry associations and vendors. The role of the “constructive cynic” is one that Romano plays very well, and his opinions matter to the industry. Drawing from historical data, and his own personal analysis, Romano explained that the issues facing the industry are not new—they just have a new urgency in today’s business climate. The complex jobs are where the money is, said Romano. Complexity involves things like multiple substrates in the same job, multiple printing technologies, foil stamping, embossing, fancy bindings, and the like.

Romano said there is no single CIM. You cannot buy a “can of JDF”. You cannot buy one workflow that does it all. Every vendor has great equipment. Legacy equipment is not going away. Too much manual intervention still exists. Many in the audience (which tends to be a group of people who already believe in the concept of the Digital Smart Factory) felt that Romano was overly critical, and played down the benefits that JDF and other CIM technologies can bring.

However, in the end, Romano landed the plane smoothly in support of the concept, saying that CIM and the Digital Smart Factory must include support for PDF, Internet integration with customers and third-party vendors, digital and conventional printing, databases, as well as faster and better job entry and business analysis using MIS systems. It’s these technologies that will enable printers to make money doing the complex jobs.

Day Two
The second day of the conference began with a subject that is becoming “hot” for commercial printers of all sizes… digital. Although the word is “digital” is part of the Digital Smart Factory” name, the group largely consists of web and sheetfed offset printers. Adding digital printing technologies to such operations is an area in which Printers can’t get enough information.

Adding Digital to Commercial Print
Xerox’s John Hamm led a panel that discussed the challenges and opportunities inherent in adding production-class digital print equipment to a commercial print operation, with speakers including users of Xerox iGen3, Kodak Nexpress and Indigo gear. Peter Dunne of Franklin Trade Graphics, a Xerox user, Dean Hanisko from Great Lakes Integrated (Nexpress and DI press user), Murray Oles from Fort Dearborn (Indigo), and Kevin Roarke from Bennett in Atlanta (also a company adding Xerox digital to a commercial operation) discussed their varied experiences with the vendor’s gear and fitting it into their commercial print operation and the Smart Factory concept.

Achieving “Buy In” Throughout Your Organization
For a technical stakeholder (operations or production management, Chief Technology Officer, Chief Information Officer, owner—the profile of most attendees at the conference) who is trying to change the way their company approaches the printing business, the next panel was very important. Selling the concepts we’ve been talking about, to everyone in a company, is essential if they are to take hold. Bob Whitton of the Arellton group led a panel discussion that focused on the key stakeholders throughout a printing company, and what they need to understand to be able to embrace the ideas of the Digital Smart Factory.

The panel began with Jim Aust from Kodak, talking about how to communicate the value of new equipment by calculating ROI (Return On Investment) for new capital investments. Ted Hagler, from Papa John’s Pizza (a successful commercial print operation in addition to making great Pizza) talked about how to involve employees in the Digital Smart Factory, and help them understand their important contribution.

The Papa John’s Pizza printing operation consists of 85 people. They use a web-enabled order system, which enables stores and franchisees to order their collateral materials. They have Heidelberg sheetfed and web presses and are very critical of color because of food reproduction issues. They use EFI AutoCount feeding an EFI PSI system with PrintFlow dynamic scheduling.

Hagler’s dynamic presentation emphasized measurement, especially of productivity. He said it is important to engage team members in continuous improvement efforts such as quality circle meetings, makeready reduction teams, run speed improvement systems, and standard bearers programs. He specified five key metrics he uses:
· Makeready times
· Run speeds
· Waste numbers
· Rework and spoilage
· Softer metrics: time spent on preventive maintenance, employee attendance, communications effectiveness, and quarterly versus annually reviews.

Managing the metrics involves:
· Monthly profit center reports (labor productivity by cost center detail report)
· Operator data collection
· Standards and operating results posted
· Merit increases tied to standards based performance
· Quarterly incentive plan tied to monthly budget performance.

Bill Jacot, from high-end printer LAGraphico serving primarily movie studios in Hollywood, explained how to “sell to management”, but not just senior management—all operational managers within a company must “buy in”. Finally, Drew Sechrist from Salesforce.com, the wildly successful CRM (Customer Relationship Management) vendor, talked about using Digital Smart Factory concepts in selling, and sales force automation.

Customer Facing Systems
One of the most important things that separates the Digital Smart Factory idea from CIM and JDF concepts, is that we’ve always incorporate a strong emphasis on customer-facing systems—taking a real supply chain view of the printing process and industry. Former R+E Council President Laura Gale led a panel called Integrating the Customer into the Digital Smart Factory: Customers are Strong Advocates for a Fully Integrated Smart Factory, which included Dean Hanisko from Geat Lakes Integrated, Todd Kalagher from the venerable Finlay in Hartford, Connecticut, and Kelly McCathran from Adobe Systems.

The first speaker was Kelly McCathran, Service Provider Evangelist at Adobe. She gave an excellent overview of the new capabilities in Adobe Creative Suite 2 (CS2), and gave a demonstration of the new JDF tools that are incorporated in Acrobat 7.

Todd Kalagher, President of Finlay told the group that his primary purpose in attending the conference was to gauge where his company stands in the journey toward being a Digital Smart Factory. Kalagher said that buying new equipment is easy; implementing that equipment effectively is much more difficult. At Finlay Printing, Kalagher has deployed EFI Hagen OA, MAN-Roland Pecom, and HP production flow, all very recently and almost simultaneously.

Kalagher’s take on Smart Factory concepts is from a customer-needs perspective. He told the group that it is necessary to determine what the customer is trying to accomplish, how he can help, and whether it is worth it. Asking “Where’s the beef?” Kalagher said that it is important to illustrate the process and to define the “big” words. These include project management, workflow, collaborative work environment, and data mining. Kalagher was clear that the terms must be defined in the customer’s own language.

Next up was Dean Hanisko of Great Lakes Integrated, a 74 year old, $20 million family- owned company in Cleveland, Ohio. A few years ago, Great Lakes began to broaden their scope beyond “just printing”. The Integrated business has three components: printing, direct fulfillment, and Internet access technologies. The company’s software cornerstone is EFI’s Hagen OA, with PrinterSite Internal, PrinterSite Exchange, and a number of internally developed Microsoft .net applications. They company’s internally-developed Aksess system creates a marketing communications portal through which customers can manage and distribute digital images and documents, facilitate offering literature and other collateral, and manage their print inventory. Customer facing applications are done via the Internet. Jobs may come through web submission, digital asset management, document management, custom web to print, and inventory management applications. Hanisko’s described the need to address customers differing objectives, based on their particular need to solve business problems. Hanisko told the group that the combination of the different services offered by the company results in a more profitable mix than “just printing”.

Where does Color Management fit in the Digital Smart Factory?
Steve Fullerton from Kodak Polychrome Graphics led a panel to discuss Color Integrity in the Digital Smart Factory. Charles Koehler from Heidelberg gave an informative presentation on the JDF-enabled color management tools in the company’s Prinect family of products. John Mitchell from MMResources in Toronto described EFI’s ColorProof family of products, and the easier, “color-by-the-numbers” approach to remote proofing that can be implemented using the popular inkjet proofing solutions.

Maximizing IT Investments
Mark Evans from JohnsByrne, Wayne Angstrom from St Ives and Todd Kalagher from Finlay then led the group in an interactive discussion about why companies make IT investments that go underutilized.

Wrapping Up
The last day of the conference began with Larry Warter from Enovation Graphics, a Fujifilm Company, outlining the many industry standards and initatives that help Printers create a Digital Smart Factory. Bill Kwiatkowski from Opus Direct talked about the enormously positive impact ISO quality registration had on his company. Bill Lavelle, a long time Smart Factory proponent, formerly with TV Guide and now with Agfa, discussed emerging workflows. Peter Doyle, from Action Printing talked about dealing with legacy equipment and the workflow components of CIM. The company has documented a dramatic reduction in waste and has cut makeready time from19 minutes to from 13 to 14 minutes for all makereadies by implementing CIM concepts.

Gareth O’Brien from Objective advantage presented a case study on a international magazine printer receiving files from publishers using PDF and JDF for job submission.

A Call to Action
Dennis Mason, of Mason Consulting, presented a study of computer integrated manufacturing recently completed for PRIMIR (www.primir.org), which is the organization that resulted from the merger of GAMIS (a former PIA affiliate) and the NPES Market Research Committee. He said that the report, is available from an NPES representative. He encouraged printers to consider joining PRIMIR.

Mason said that the study—a collaboration between PrintCom Consulting Group (Bill
Lamparter) and his company, Mason Consulting, resulted from a nine-month project completed in late 2004. The study involved 275 interviews, four expert panels, and 12 case studies. The goal of the study was to identify current technologies, barriers to adoption of CIM, costs and ROIs, likely standards and formats, necessary IT investments, and key attitudes among printers.

Discussing key findings of the PRIMIR study, Mason told the crowd that JDF is the de
facto standard for CIM. He said that most printers were found to be reluctant or indifferent to CIM (most likely because they have never attended the Digital Smart Factory, and don’t realize the benefits that can be obtained), and projected that the market is limited for the near future. He went on to say that key indicators of CIM success are print volume, printer size and type, management style and use of data, the existence of an MIS system, customer requirements, CTP plus ink key settings, and legacy equipment.

Finally, Doug Belkofer of EFI talked about CIP4 (www.cip4.org) and JDF, saying that
more than 300 companies now belong to the CIP4 consortium. He advised audience members to go to www.cip4.org for statistics on membership breakdown. CIP4 has a number of working groups dealing with everything from Digital, and MIS topics to sheetfed and web printing. Meetings and WebEx conference calls are held two to four times per month and face-to-face meetings and interoperability events are held three or four times per year. Belkofer made the important point that CIP4 needs more printers as members to make sure that what the many vendor members are building meets customer demands.

Summary
Whereas in the early days of The Digital Smart Factory Forum, presentations and discussion were very academic, this year’s event (and frankly, the last couple of years forums) was one that focused on practical subjects that can be implemented today-- and incorporated numerous real-world case studies. In the early days, the attendees worked for very large printing and publishing companies, and now the group is populated equally by medium-sized sheetfed commercial printers.

The R+E Council of the NAPL and its Digital Smart Factory group are open for membership by any interested party and are a great way to network with peers in the industry who are working hard to make their companies more efficient and profitable, by implementing technologies and concepts like those discussed here. I encourage you to contact the NAPL (www.napl.org); if you are already an NAPL member, you can easily add R+E Council membership to your package.